Editorial comment: World Bank endorses Government economic reforms

THE World Bank says Zimbabwe has changed its Income Group from Lower Income to Lower Middle Income. The upgrading of Zimbabwe by the World Bank is testimony to that the economic reforms pursued by the country are bearing fruit.

The World Bank classifies the world’s economies into four income groups — high, upper-middle, lower-middle, and low. It bases the classifications on Gross National Income (GNI) per capita (current US$) calculated using the Atlas method. The classification is updated each year on 1 July.

The classification of countries is determined by two factors: A country’s GNI per capita, which can change with economic growth, inflation, exchange rates, and population.

Revisions to national accounts methods and data can also influence GNI per capita, as well as classification threshold. The thresholds are adjusted for inflation annually using the Special Drawing Rights — SDR deflator.

Finance Minister Prof Mthuli Ncube is on record as saying the country’s economy is stabilising following the introduction of economic reforms announced under his Transitional Stabilisation Programme (TSP).

“Following the onset in the implementation macro-fiscal stabilisation measures of the Zimbabwe Transitional Stabilisation Programme (TSP) which were further buttressed through the 2019 National Budget austerity measures, performance of Zimbabwe public finances started improving with budget deficits being contained from October 2018. By December 2018, a phenomenal budget surplus was recorded according to the preliminary budget outturn,” Ncube was quoted as saying in the media.

And Professor Ncube has maintained that authorities have instituted measures to ensure the local currency will not suffer previous depredations, following the recent gazetting of Statutory Instrument 142 of 2019, which makes the Zimbabwe dollar the sole legal tender.

“There must be fiscal discipline and what we have at the moment is fiscal discipline of the highest quality and the results speak for themselves.

We don’t have a budget deficit, we have a surplus which we are deploying now to our social protection, and we will be increasing salaries for the civil servants and importation of food.

“The second fundamental is the monetary discipline in the form of managing the growth of money supply.

The growth of money supply in the last few months has been flat but because there was fiscal discipline which has been a problem in the first place.

“If you go back to 2008, it is the exact opposite.

We had no fiscal discipline, we had no monetary sector discipline. The budget deficit was huge, rising and uncontrollable and was being monetised through the printing of money.

We saw many zeros, we removed some and they came back. We do not have that at the moment, we have the right fundamentals to support the domestic currency,” he was quoted as saying.

The country is going through stages of a radical economic transformation that will witness the country becoming a middle-income economy by 2030, as per the vision of President Mnangagwa.

The President has vowed that he would lead Zimbabwe towards catching up with its peers after a long period of stagnation and underdevelopment, and the latest developments bear testimony to that the country is moving in the right direction.

The President has been leading an aggressive realignment of the country’s economy through introducing far-reaching reforms and re-engagement with the international community.

Through his open for business campaign, authorities are opening investment opportunities to international and local investors who were previously reluctant to bring their money to Zimbabwe. He has emphasised that economic revival and growth are at the centre of his Government’s agenda.